E2V.L Regulatory News (E2V)

1 Dec 2005 07:02

e2v technologies PLC01 December 2005 1 December 2005 e2v technologies plc Interim results for six months to 30 September 2005 e2v technologies plc is a leading developer and manufacturer of high-technologyelectronic components and sub-systems to the medical & science, aerospace &defence, and commercial & industrial sectors. e2v is a constituent of thetechMARK AllShare Index. Highlights •Turnover of £49.1m (2004: £47.2m) • Profit after taxation £2.0m (2004: loss £1.1m) •Adjusted* profit before tax and net finance costs of £4.5m (2004: £4.2m) •Earnings per share of 3.55p (2004: loss of 2.33p) •Interim dividend of 2.0p per share up 5.8% •Cash generated by operations up £6.7m to £9.6m • Acquisition of Gresham Scientific Instruments Limited •Three significant contract wins totalling £16.9m •Drive to increase productivity progressing well, offsetting increasing input costs 6 months ended 6 months ended Year ended 30 September 2005 30 September 2004 31 March 2005 £ million £ million £ million Turnover 49.1 47.2 100.5Profit before tax and net finance costs 3.7 2.3 10.5Adjusted* profit before tax and net finance costs 4.5 4.2 12.6 Profit/(loss) after taxation 2.0 (1.1) 3.4Total shareholders' equity 37.9 34.1 38.2Net borrowings (26.8) (23.0) (21.8) Earnings/(loss) per share - basic 3.55p (2.33)p 6.93pAdjusted earnings per share - basic 4.56p 4.17p 13.72p *Before tax and net finance costs, amortisation of acquired intangibles,voluntary severance payments, share based payment charges, initial publicoffering costs and abnormal interest charges and their taxation impacts. Commenting, Keith Attwood, Chief Executive said: "This is a good set of a results for the Group and during the first half we haveincreased our operating profitability and cash generation as well as havingsecured several major contracts in both our Sensors and Electronic Tubesbusinesses. In addition, the acquisition of Gresham Scientific Instruments ismaking a positive contribution to earnings and adds breadth to e2v's technologyportfolio in the Sensors business. In line with our strategy for growth we willcontinue to target additional complementary acquisition opportunities. In previous years, the second half has been stronger than the first and with astrong order book that includes order cover for the second half 10% higher thanlast year, as well as the expectation of further contract wins, the Groupremains on track to deliver a performance for the current financial year in linewith the Board's expectations". Further enquiries: e2v technologies plcKeith Attwood, Chief Executive Today: 0207 554 1400Mike Hannant, Finance Director Thereafter: 01245 493 493Website: www.e2v.com Gavin Anderson & CompanyKeith Brookbank/ Charlotte Stone Tel: 0207 554 1400 Review of the half year RESULTS OVERVIEW Sales at £49.1m increased 3.9% over last year and adjusted* profit before taxand net finance costs increased by 6.2% to £4.5m (2004: £4.2m). Pre tax profitfor the half year was £2.8m (2004: loss £1.7m). The Group continues to compete successfully for significant contracts in thedesign and supply of both Sensors and Electronic Tubes; within the currentreporting period the Group has won three significant contracts amounting to£16.9m. These are: • £9.6m contract to supply ESA with Sensors for the GAIA project • £4.3m order to supply travelling wave Electronic Tubes for the Typhoon Defensive Aids Sub System (DASS) • £3.0m contract from a US based Dental Systems business to supply high performance x-ray dental Sensors As expected, the Group has experienced strengthening demand for its electronictube products across all market sectors, derived primarily as a result of marketdynamics. The Sensors product group showed continued strong growth in themedical and science sector, partly offsetting the impact of programme phasing inour other markets. In July 2005, we completed the acquisition of GreshamScientific Instruments Limited, a specialist manufacturer of x-ray detectors forscientific and professional scanning electron microscopes. We continue to targetcomplementary acquisition opportunities and have recently appointed a NorthAmerican based advisory firm to help us accelerate our acquisition strategy inthis important geographic sector, which today accounts for 36% of turnover. Furthermore, during the first half year we implemented a voluntary severancescheme at a cost of £0.5m, in support of our ongoing focus on productivityimprovements and 'right-skilling' the business. Accordingly, adjusted* profitper employee has increased by 5%. Adjusted basic earnings per share increased by more than 9% at 4.56p (2004:4.17p), and cash generated by operations increased more than three fold to £9.6m(2004: £2.9m). Net borrowings at 30 September 2005 were £26.8m (2004: £23.0m), the net increasearising from the purchase of Gresham Scientific Instruments Limited being partlyoffset by cash generated from operating profits and working capital reduction. Whilst there has been a relatively stable exchange rate between the US$ and UK£in the last 18 months, the result of the Groups hedging policy is that a loss onexchange has been incurred of £0.1m compared to a profit of £0.6m in the firsthalf of last year. Exchange rate movements on reported revenues for the firsthalf has been minimal. Dividend The board has declared an interim dividend of 2.00 pence per share. Thisrepresents an effective increase of 5.8 % over the 2004 interim dividend of 0.63pence (which was based on the two months post IPO trading period). BUSINESS OVERVIEW The Sensors product group overall achieved slightly lower sales than last year,though high performance imaging, for the medical and science sector, continuedthe growth profile enjoyed last year. The anticipated improvements in ElectronicTubes sales compared to last year underpinned our overall performance. The order book at 30 September 2005 amounts to £79.0m (2004: £77.2m) andincluded £46.4m (2004: £42.1m) for delivery in the current financial year.Several multi year contracts, which the Group signed at around the same timewith some major radiotherapy customers in the medical and science sector of ourElectronic Tubes product group, will shortly come to an end and the effect ofthis is that the order book is £10.6m lower than at September 2004. Thesecontracts are due for renewal in the coming months and we are confident ofmaintaining our position as a leading supplier of Electronic Tubes into thismarket. SENSORS Sensor product group sales at £22.2m were 5% lower than last year, and profitbefore central overheads of £5.1m (2004: £5.6m) reflected this position. Theorder book for the Sensors product group is a healthy £45.2m (2004: £36.5m).Orders due for delivery this year of £26.9m (2004: £22.1m) represent an increaseof 22%, highlighting the impact of programme phasing in the current year. Medical and Science Overall, sales in this sector grew by 13.3% to £8.3m (2004: £7.4m). The dentalsector continued to show strong year-on-year growth of 26%, fuelled by excellenttake up from end users in the North American market. The first half saw a slight slow down in the take up of high performance imagesensors for life science applications, such as drug discovery and geneticanalysis, though this is not considered a structural change to the opportunitiesavailable in this growing market. In addition, this sector benefited from £0.5m of sales from Gresham ScientificInstruments Limited, acquired in July 2005. Gresham, based near High Wycombe inthe UK, is a leading independent manufacturer of X-ray detectors and associatedproducts for Energy Dispersive X-ray ('EDX') and X-ray fluorescence ('XRF')spectrometry. These products are primarily utilised within scanning andtransmission electron microscopes, used in a wide range of applications in thescientific arena and also in wider industrial applications such as mining andthe detection of harmful heavy metals in food. The company supplies productsworldwide to OEM's, industrial and scientific end users, and acceleratorresearch laboratories. Over 70% of sales are exported. The acquisition ofGresham introduces new technologies and products to e2v's sensors portfoliosupplying into the high growth medical and science sector. e2v provides Greshamwith further opportunities for growth due to its established presence in the USmarket and its well-developed global distribution channels. Aerospace and Defence Overall, sales in this sector fell by 17.4% to £7.1m (2004: £8.6m). This wasprimarily due to programme phasing, with large projects such as GAIA coming onstream in the second half and some delays of orders associated with tranche 2 ofthe Typhoon programme. In addition, last year this business benefited from thecompletion of a significant US radar programme, worth £1m. The order book forthis sector at 30 September 2005 amounted to £22.3m (2004: £13.6m) and £12.2m(2004: £9.6m) is due for delivery in the current year. Commercial and Industrial Overall sales in this sector fell by 9% to £6.8m (2004: £7.5m) following thecompletion of a major contract in 2004. During 2002/03 and the first half of 2003/04 the Group supplied thermal imagingcameras to equip the majority of the UK Fire Brigades. As a result, sales ofthese cameras in the current half year are down by £1.4m but growth has beenachieved by the remainder of the products supplied in this sector, such thatoverall the decline is only £0.7m. £0.5m of growth is from sales of our RadioEvacuation Distress System (REDS) for use by fire fighters. The device isintegrated into the fire fighters' breathing apparatus and we are designed intothe system supplied by one of the worlds leading suppliers of breathingapparatus. Automotive applications represent 35% of our sales in this sector and sales haveremained stable year on year. Our products include microwave alarm systems forcars and trucks, and RF components which are supplied into adaptive cruisecontrol, which is being offered as an optional extra on an increasing number ofvehicle platforms and volumes grew by over 75%. Volumes of microwave alarms intoexisting platforms increased by 4% and overall margins are being maintaineddespite pricing pressures. ELECTRONIC TUBES For the six months to 30 September 2005, sales of Electronic Tubes increased by12.8% to £26.9m (2004: £23.8m) and growth was achieved in all sectors. The orderbook amounted to £33.8m at 30 September 2005 (2004: £40.7m) and £19.5m (2004:£20.0m) of this is contracted for delivery this financial year. The lower orderbook levels are a consequence of the ordering pattern of the major radiotherapycustomers as mentioned previously. The increase in profit before centraloverheads to £5.1m (2004: £3.2m) is a result of increasing sales, improvedproductivity and falling warranty costs. Medical and Science Overall, sales in this sector grew by 7.2% to £8.7m (2004: £8.1m). Growth hasbeen achieved primarily as a result of increasing demand for radiotherapy andsales by our radiotherapy customers, and others, into cargo screeningapplications. Both applications utilise identical products supplied by thegroup. As expected, sales into a microwave endometrial ablation application fellto an insignificant level now that the customer is focused on the on-goingrevenue stream from consumables, rather than increasing the population ofequipment in the field. This position is not expected to change in the nearfuture. The Group has maintained its position as the leading supplier of magnetrons tothe world's leading radiotherapy manufacturers and has seen increased demand forits compact modulator products into this application. The prospects for substantial investment across the world in the 'nextgeneration' of major scientific facilities at national laboratories continues toimprove and the Group is well placed to supply advanced electronic tubes andcomplementary products for these facilities. Sales so far are insignificant butthe Group is currently under contract with Cornell University in the USA tosupply the initial quantity of electronic tubes they require for their facility. Aerospace and Defence Overall, sales in this sector grew by 36% to £6.3m (2004: £4.6m) due todeliveries on contracts for military satellite communications and radar systemupgrades. The Group has won all contracts for travelling wave tubes supplied into the Typhoon Defensive Aids Sub System (DASS) and is under contract to supply the requirement for a fleet of 380 aircraft over 30 months. This contract was won against competition from North America, as well as Europe, and confirms the Group's position as one of the leading suppliers of travelling wave tubes into such systems. This leaves us well placed to participate in the potential upgrade of the US fast jet fleet. The tighter export licence environment for certain Asian territories,experienced last year, has continued into the current year with the consequentimpact on our opportunities in these markets. Commercial and Industrial Overall sales, in this sector grew by 7.3% to £11.9m (2004: £11.1m). The increased demand worldwide for marine radar seen last year continued intothe current year and sales of the group's magnetrons used in this applicationgrew by 15% to £2.2m (2004: £1.9m). The roll out of Digital Terrestrial TV in the USA increased sales into thissector by 19% to £4.9m (2004: £4.1m) where the Group's high efficiencyelectronic tubes are the preferred choice of the TV transmitter operators. Theroll out is expected to continue through 2006. Sales into industrial applications, where the group's electronic tubes are usedin a number of industrial processes ranging from pipe welding to foodpreparation, and into satellite communications are at last year's levels.Continued growth in the commercial satellite communications market and therecent introduction of a wider range of amplifiers has resulted in additionalgrowth opportunities that have yet to be realized. INTERNATIONAL DEVELOPMENT In the first half the Group's exports amounted to 76% of turnover and theperformance of the Group's overseas distributor network is constantly underreview in order to maximise opportunities. UK sales of £12m were at last year'slevels but sales into North America increased by 4.9% to £17.7m (2004: £16.9m)in sterling and US dollar terms and sales into Rest of World grew by 5.8% to£19.4m (2004: £18.3m). We continue to explore opportunities into China utilisingour own business development office and review new routes to market, particularin North America, for our recently acquired x-ray detector product range. CAPITAL INVESTMENT AND RESEARCH AND DEVELOPMENT Investment continues in the business and capital expenditure on property, plantand equipment increased by 40% to £3.4m. We continue to invest in our highperformance imaging facility. This not only increases capacity but also ourcapability to meet the demanding technical requirements of customers. Thisapplies to our wafer fabrication facility as well as post-processing and testfacilities. In the first half of the year we have focussed on successfully stabilising thefirst phase of the SAP implementation. In the second half we are launching phase2 of our programme, which is intended to further enhance our business processesincluding areas such as shop floor control and product data management. Research and development charges amounted to £2.6m (2004: £2.7m) and represented5.3% of sales. Research and development funds are focussed primarily on theintroduction of new products and technologies as well as on the support ofexisting products. These programmes are at various stages of maturity providinga balance between protecting the short, medium and long-term interests of theGroup with regard to organic growth. In March 2005, the Group formally opened the e2v Centre for Electronic Imagingat Brunel University and is currently sponsoring 5 PhD students and a Chair atthe University. In addition, the Group has signed four Knowledge TransferPartnerships (KTPs) with Queen Mary University of London, Nottingham, Manchesterand Surrey Universities. These partnerships provide the Group with access toemerging technologies that can be focussed on existing and future marketopportunities. OUTLOOK As we approach the end of the third quarter of the financial year, the Groupcontinues to see strong demand across both the Electronic Tubes and Sensorsproduct groups. The order book at 30 September 2005 is £79m and includes £46.4mfor delivery in the current financial year, and the latter is a 10% increase onlast year. The savings resulting from the voluntary severance programme announced in thefirst half are having an impact on costs in the second half, but the businesswill have to contend with increased input costs, particularly energy andmaterials. However, the board will continue to pursue cost reduction and yieldimprovement programmes, as well as organic sales growth, in order to develop themargins of the Group. In line with our strategy for growth we will continue totarget additional complementary acquisition opportunities. The board are confident that the Group is on track to meets its expectations forthe full year. George Kennedy Keith AttwoodChairman Chief Executive Officer Independent review report to e2v technologies plc INTRODUCTION We have been instructed by the Company to review the financial information forthe six months ended 30 September 2005 which comprises the Consolidated incomestatement, Consolidated statement of total recognised income and expense,Consolidated balance sheet, Consolidated cash flow statement and the relatednotes 1 to 11. We have read the other information contained in the InterimReport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the Company in accordance with guidance containedin Bulletin 1999/4 'Review of interim financial information' issued by theAuditing Practices Board. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the Company, for our work,for this report, or for the conclusions we have formed. DIRECTORS' RESPONSIBILITIES The Interim Report, including the financial information contained therein, isthe responsibility of, and has been approved by, the Directors. The Directorsare responsible for preparing the Interim Report in accordance with the ListingRules of the Financial Services Authority. As disclosed in note 1, the next annual financial statements of the Group willbe prepared in accordance with those International Financial Reporting Standards(IFRSs) adopted for use by the European Union (EU). The accounting policies are consistent with those that the directors intend touse in the next annual financial statements. There is, however, a possibilitythat the directors may determine that some changes to these policies arenecessary when preparing the full annual financial statements for the first timein accordance with those IFRSs adopted for use by the EU. REVIEW WORK PERFORMED We conducted our review in accordance with guidance contained in Bulletin 1999/4'Review of interim financial information' issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof Group management and applying analytical procedures to the financialinformation and underlying financial data, and based thereon, assessing whetherthe accounting policies have been applied. A review excludes audit proceduressuch as tests of controls and verification of assets, liabilities andtransactions. It is substantially less in scope than an audit performed inaccordance with International Standards on Auditing (UK and Ireland) andtherefore provides a lower level of assurance than an audit. Accordingly we donot express an audit opinion on the financial information. REVIEW CONCLUSION On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2005. Ernst & Young LLPCambridge30 November 2005 CONSOLIDATED INCOME STATEMENTFor the six months ended 30 September 2005 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2005 2004 2005 Note £000 £000 £000 Revenue from operations 2 49,081 47,227 100,547Cost of sales (33,591) (32,103) (65,831)----------------------------------------------------------------------------------------------------------Gross profit 15,490 15,124 34,716Research and development costs (2,580) (2,702) (5,195)Distribution costs (4,754) (4,730) (9,357)----------------------------------------------------------------------------------------------------------Amortisation of intangible assets arising on acquisitions (78) (5) (10)Initial public offering costs 3 - (1,901) (1,901)Voluntary severanceShare based payment payments (497) (1) (61)charges (182) (7) (142)Other administrative costs (3,696) (3,492) (7,550)-----------------------------------------------------------------------------------------------------------Administrative expenses (4,453) (5,406) (9,664)----------------------------------------------------------------------------------------------------------- Profit before tax and net finance costs 2 3,703 2,286 10,500Finance income 32 115 154Finance costs 4 (945) (4,124) (5,095)----------------------------------------------------------------------------------------------------------- Profit/(loss)before taxation 2,790 (1,723) 5,559Tax on profit/loss on ordinary activities 5 (837) 583 (2,167)----------------------------------------------------------------------------------------------------------- Profit/(loss) for the period/year from operationsattributable to equity shareholders 1,953 (1,140) 3,392=========================================================================================================== Earnings/(loss) per share - basic 7 3.55p (2.33)p 6.93pEarnings/(loss) per share - diluted 7 3.54p (2.33)p 6.92pAdjusted earningsper share - basic 7 4.56p 4.17p 13.72pAdjusted earningsper share - diluted 7 4.54p 4.17p 13.69p CONSOLIDATED STATEMENT OF TOTAL RECOGNISED INCOME AND EXPENSEFor the six months ended 30 September 2005 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2005 2004 2005 £000 £000 £000 Profit/(loss) for the period 1,953 (1,140) 3,392==========================================================================================================Exchange difference on retranslation of foreign operations 443 98 (144)Tax on exchange differences taken directly to equity (132) (29) 43Loss on cash flow hedges (1,089) - -Tax on loss on cash low hedges 327 - -Loss on interest rate hedges (181) - -Tax on loss on interest rate hedges 55 - -Tax on share based payments taken directly to equity (63) 50 78----------------------------------------------------------------------------------------------------------Total recognised gains and losses relating to the period 1,313 (1,021) 3,369========================================================================================================== CONSOLIDATED BALANCE SHEETAt 30 September 2005 30 September 30 September 31 March 2005 2004 2005 Note £000 £000 £000AssetsNon-current assetsIntangible assets 22,074 16,452 16,810Property, plant and equipment 20,831 18,260 19,538Deferred tax asset 550 457 416---------------------------------------------------------------------------------------------------------- 43,455 35,169 36,764Current assetsInventories 22,229 22,056 19,053Trade and other receivables 24,189 24,325 26,493Derivative financial instruments 91 - -Cash and cash equivalents 5,457 4,581 4,069---------------------------------------------------------------------------------------------------------- 51,966 50,962 49,615----------------------------------------------------------------------------------------------------------Total assets 95,421 86,131 86,379========================================================================================================== LiabilitiesCurrent liabilitiesBorrowings (7,454) (5,408) (6,158)Trade and other payables (19,429) (19,879) (17,738)Derivative financial instruments (1,067) - -Current tax liabilities - - (502)----------------------------------------------------------------------------------------------------------- (27,950) (25,287) (24,398)-----------------------------------------------------------------------------------------------------------Net current assets 24,016 25,675 25,217---------------------------------------------------------------------------------------------------------- Non-current liabilitiesBorrowings (24,793) (22,146) (19,693)Deferred tax liability (1,097) (449) (467)Provisions (3,679) (4,185) (3,579)---------------------------------------------------------------------------------------------------------- (29,569) (26,780) (23,739)----------------------------------------------------------------------------------------------------------Net assets 2 37,902 34,064 38,242========================================================================================================== Shareholders' equityOrdinary share capital 2,796 2,796 2,796Share premium 27,301 27,301 27,301Capital redemption reserve 274 274 274Hedge reserve (521) - -Translation reserve 209 69 (101)Share-based payment reserve 213 59 263Investment in own shares held by employee benefit trust (10) (10) (10)Retained earnings 7,640 3,575 7,719----------------------------------------------------------------------------------------------------------Total shareholders' equity 37,902 34,064 38,242========================================================================================================== CONSOLIDATED CASH FLOW STATEMENTFor the six months ended 30 September 2005 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2005 2004 2005 Note £000 £000 £000 Net cash flows from operating activities 10 6,564 (980) 5,957Investing activitiesInterest received 32 181 154Purchase of property, plant and equipment (3,439) (2,445) (6,164)Purchase of software (572) (607) (1,403)Proceeds on disposal of property, plant and equipment 3 18 22Expenditure on product development (458) (434) (1,000)Acquisition of subsidiary undertaking, net of cash acquired 11 (4,974) - ------------------------------------------------------------------------------------------------------------Net cash outflow from investing activities (9,408) (3,287) (8,391)-----------------------------------------------------------------------------------------------------------Financing activitiesEquity dividends paid (2,143) - (347)Issue of ordinary share capital - 27,707 27,707Redemption of ordinary share capital - (12) (12)New bank loans raised 7,600 28,000 27,500Transaction costs of new bank loans raised - (460) (460)Repayment of bank loans (1,250) (50,954) (52,207) Repayments of obligations under finance leases (7) - ------------------------------------------------------------------------------------------------------------Net cash inflow from financing activities 4,200 4,281 2,181-----------------------------------------------------------------------------------------------------------===========================================================================================================Net increase/(decrease) in cash and cash equivalents 1,356 14 (253)Cash and cash equivalents at beginning of period 4,069 4,475 4,475Effect of foreign exchange 32 92 (153)-----------------------------------------------------------------------------------------------------------Cash and cash equivalents at end of period 5,457 4,581 4,069=========================================================================================================== Reconciliation of net cash flow to movement in net debt 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2005 2004 2005 £000 £000 £000 Increase/(decrease) in cash and cash equivalents 1,356 14 (253)Cash flow from (increase)/decrease in loans (6,350) 22,954 24,707Issue costs on new long term loans - 460 460l---------------------------------------------------------------------------------------------------------Change in net debt resulting from cash flows (4,994) 23,428 24,914Amortisation of debt costs (46) (2,189) (2,236)Exchange differences 32 92 (153)----------------------------------------------------------------------------------------------------------Movement in net debt (5,008) 21,331 22,525Opening net debt (21,782) (44,307) (44,307)----------------------------------------------------------------------------------------------------------Closing net debt (26,790) (22,976) (21,782)========================================================================================================== NOTES TO THE INTERIM REPORT 1. BASIS OF PREPERATION The interim financial information has been prepared in accordance with theaccounting policies set out in the Company's press release addressing thetransition to IFRS, dated 1 November 2005. The press release is available on theinvestor relations section of the Company's website. The figures for the period ended 30 September 2004 and the year ended 31 March2005 have been extracted from the published accounts, and adjusted to takeaccount of any IFRS impact. A reconciliation of changes to Shareholders' equityby moving from UK GAAP to IFRS is contained within the Company's press releaseaddressing the transition to IFRS, dated 1 November 2005. It is possible that changes may be required to the financial informationcontained in this Interim Report when it appears for comparative purposes infuture financial statements as not all IFRS statements have been formallyendorsed by the EU and further interpretive guidance on the standards may beissued. The Group adopted IAS 32 and IAS 39 with effect from 1 April 2005 and details ofthe impact of that transition can be found in the Statement of changes inshareholders' equity in note 8 to the accounts. The Interim Report is unaudited but has been reviewed by the auditors, Ernst &Young LLP, and their report to e2v technologies plc is set out on page 5. Thefinancial information contained in this interim report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Theinterim financial information has been prepared on the basis of the accountingpolicies set out in the Group's statutory accounts for the year ended 31 March2005. The comparative financial information is based on the statutory accountsfor the financial year ended 31 March 2005, upon which an unqualified auditor'sopinion has been issued. The interim report for the six months ended 30 September 2005 was approved bythe Directors on 30 November 2005. 2. SEGMENTAL ANALYSISTurnover is attributable to two continuing activities, being the supply ofelectronic tubes and subsystems, and the supply of sensor components andsubsystems. An analysis of turnover, profit before tax and net finance costs and net assetsby activity is given below: 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2005 2004 2005 £000 £000 £000Group turnoverSensorsMedical and Science 8,335 7,359 15,457Aerospace and Defence 7,066 8,559 16,753Commercial and Industrial 6,786 7,474 15,890------------------------------------------------------------------------------------------------------------ 22,187 23,392 48,100------------------------------------------------------------------------------------------------------------Electronic tubesMedical and Science 8,674 8,091 18,182Aerospace and Defence 6,290 4,622 10,770Commercial and Industrial 11,930 11,122 23,495------------------------------------------------------------------------------------------------------------ 26,894 23,835 52,447------------------------------------------------------------------------------------------------------------ Total 49,081 47,227 100,547============================================================================================================ Group profit before tax and net finance costsSensors 5,072 5,619 12,559Electronic tubes 5,112 3,177 9,299Difference on exchange (147) 620 1,689Voluntary severance payments (497) (1) (61)Share based payment charges (182) (7) (142)Initial public offering costs - (1,901) (1,901)Unallocated overheads (5,655) (5,221) (10,943)------------------------------------------------------------------------------------------------------------ 3,703 2,286 10,500============================================================================================================Net assetsSensors 19,976 13,785 14,557Electronic tubes 16,891 16,483 17,330Central unallocated net assets 1,035 3,796 6,355------------------------------------------------------------------------------------------------------------ 37,902 34,064 38,242============================================================================================================Central unallocated net assets comprise certain fixed assets, debtors,creditors, loan notes, net debt and taxation. An analysis of turnover, profit before tax and net finance costs and net assetsby geographical market is given below: 6 months 6 months Year ended ended ended 30September 30 September 31 March 2005 2004 2005 £000 £000 £000Group turnoverTurnover by destinationUnited Kingdom 11,950 11,999 25,081United States 17,732 16,902 35,802Rest of the world 19,399 18,326 39,664----------------------------------------------------------------------------------------------------------- 49,081 47,227 100,547=========================================================================================================== Turnover by originUnited Kingdom 27,948 26,461 56,824United States 17,697 17,967 36,836Rest of the world 3,436 2,799 6,887----------------------------------------------------------------------------------------------------------- 49,081 47,227 100,547=========================================================================================================== Group profit before tax and net finance costsUnited Kingdom 1,808 3,596 9,409United States 1,607 694 2,727Rest of the world 288 (103) 265----------------------------------------------------------------------------------------------------------- 3,703 4,187 12,401Initial public offering costs (all United Kingdom) - (1,901) (1,901)----------------------------------------------------------------------------------------------------------- 3,703 2,286 10,500===========================================================================================================Net assetsUnited Kingdom 32,902 31,599 34,554United States 4,172 2,213 3,127Rest of the world 828 252 561----------------------------------------------------------------------------------------------------------- 37,902 34,064 38,242=========================================================================================================== 3. Initial public offering costs On 23 July 2004 the Group was admitted to the London Stock Exchange. The costsincurred with the admission and associated financing amounted to £4,043,000, ofwhich £1,682,000 was set against share premium and £460,000 is amortised asinterest charges over five years. The remaining £1,901,000 has been charged tothe income statement. 4. Finance costs Included in finance costs for the six months to 30 September 2004 was theone-off write-off of debt issue costs of £2,050,000 relating to the earlyrepayment of loans, raised for the management buy-out in July 2002. 5. Taxation The tax (charge)/ credit for the period has been calculated on the basis of theDirectors' best estimate of the annual effective tax rate for the year. 6. Dividends 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2005 2004 2005 £000 £000 £000 Final dividend - 3.90p per share 2,143 - -Interim dividend - 0.63p per share - - 347------------------------------------------------------------------------------------------------------------ 2,143 - 347============================================================================================================ The number of shares owned by the employee benefit trust is 884,239 (968,091 at30 September 2004 and 31 March 2005). The employee benefit trust has waived itsright to receive dividends. On 30 November 2005 the Board declared an interimdividend of 2.0p per share (2004: 0.63p). The interim ordinary dividend is to bepaid on 11 January 2006 to shareholders on the register at close of business on9 December 2005. 7. Earnings/(loss) per share The calculated basic and diluted earnings/(loss) per share is based on thefollowing: 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2005 2004 2005 £000 £000 £000 Profit/(loss) for the period 1,953 (1,140) 3,392---------------------------------------------------------------------------------------------------------- Adjusted earnings per share is arrived at using the following earnings and sharenumbers: 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2005 2004 2005 £000 £000 £000 Profit/(loss) for the period 1,953 (1,140) 3,392Initial public offering costs - 1,901 1,901Abnormal interest charges - 2,050 2,050Tax impact of initial public offering costs - (782) (782)Amortisation of acquired intangible assets 78 5 10Share based payment charges 182 7 142Voluntary severance costs 497 1 61Tax impact of itemised administrative expenses (204) (2) (61)------------------------------------------------------------------------------------------------------------ 2,506 2,040 6,713============================================================================================================ Weighted average number of shares No. 000 No. 000 No. 000 For basic and adjusted earnings per share 55,002 48,944 48,944Exercise of options 194 - 94-----------------------------------------------------------------------------------------------------------For diluted earnings per share 55,196 48,944 49,038=========================================================================================================== The adjusted earnings per share is considered to more appropriately reflect theunderlying performance of the business. 8. Consolidated statement of changes in shareholders' equity For the six months ended 30 September 2005 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2005 2004 2005 Note £000 £000 £000 Opening equity 38,242 7,383 7,383Adjustment for implementation of IAS 32/39 308 - ---------------------------------------------------------------------------------------------------------------Opening balance for the period as adjusted 38,550 7,383 7,383Profit/(loss) for the period 1,953 (1,140) 3,392Dividends on equity shares 6 (2,143) - (347)New share capital subscribed - 27,707 27,707Purchase of own shares - (12) (12)Other income and expenses recognised directly in equity (640) 119 (23)Share based payment charges 182 7 142--------------------------------------------------------------------------------------------------------------Closing equity 37,902 34,064 38,242============================================================================================================== 9. Adoption of IAS32 and IAS39 -As noted in the Company's press release addressing the transition to IFRS,dated 1 November, on 1 April 2005 the Company implemented IAS 32 and IAS 39. Theimpact of the adjustment on opening shareholders equity at 1 April 2005 was anincrease of £308,000. The impact on the current period is a charge, aftertaxation, of £47,000. 10. Reconciliation of operating profit to net cash flow from operatingactivities 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2005 2004 2005 £000 £000 £000 Profit from operations 3,703 2,286 10,500 Adjustments for:Equity settled share-base payment charges 182 8 142Financial instruments - fair value adjustment (66) - -Depreciation of property, plant and equipment 2,367 2,301 4,735Amortisation of software 570 399 853Amortisation of acquired intangible assets 78 5 10Amortisation of capitaliseddevelopment expenditure 394 363 915Increase/(decrease) in provisions 87 (28) (1,059)--------------------------------------------------------------------------------------------------------------Operating cash flows before movements in working capital 7,315 5,334 16,096Increase / (decrease) in prepayments on contracts 1,985 (194) (1,342)Decrease / (increase) in debtors 3,545 2,016 (1,100)(Increase)/decrease in stocks (2,396) (399) 2,604(Decrease) in creditors (856) (3,904) (4,470)--------------------------------------------------------------------------------------------------------------Cash generated by operations 9,593 2,853 11,788Income taxes paid (2,120) (926) (1,560)Interest paid (909) (2,907) (4,271)--------------------------------------------------------------------------------------------------------------Net cash from operating activities 6,564 (980) 5,957-------------------------------------------------------------------------------------------------------------- 11. Acquisition of subsidiary undertaking On 28 July 2005 the Company acquired the entire share capital of GreshamScientific Instruments Limited for a cost of £5,211,000. The fair value of netassets acquired, including cash of £237,000, amounted to £3,209,000. Theresulting goodwill on acquisition was £2,002,000. This information is provided by RNS The company news service from the London Stock Exchange